Please note that the text of this document has been=20 replicated from http://www.ato.gov.au/externalsite.asp?url=3Dhttp://www.taxr= eform.ato.gov.au=20 for your convenience.
A PDF=20 version of this document is available

PAYG Withholding Calculation Sheet

PAYG Withholding = Calculation=20 Sheet

Index no. 6202

A guide to = Commissions

Valid at 1 July 2000=20

Small Business=20

Introduction

As a PAYG payer you are required to withhold an amount = from=20 certain payments including commissions. Commissions are = typically=20 payments made as a means of recognition of performance or = service,=20 and may be calculated as a percentage of the proceeds of a=20 particular transaction.

How to determine the amount = to=20 withhold?

Where a commission is paid for regular single pay periods = of one=20 week to one month, the amount is added to any other payment = for that=20 period. An amount should be withheld in accordance with the = PAYG=20 Withholding Tax Tables.

Where commission payments relate to a period in excess of = one pay=20 period, or are paid on an irregular basis, the amount to = withhold=20 may be calculated in either of the following ways.

Option (A)

The amount is considered to relate to the period since = the last=20 similar payment, or since 1 July, whichever is later, and = the amount=20 to withhold is calculated as follows:

Use the Tax Tables to work out the amount to withhold = on the=20 normal payment for one pay period.=20
Divide the commission by the number of pay periods to = which it=20 relates=20
Disregard any cents e.g. $1.75 becomes $1. (If the = resulting=20 amount is nil, there is no amount to withhold on the = commission.=20 Use the Tax Tables to work out the correct amount to = withhold on=20 any other payment for that period. There is no need to go = to the=20 remaining steps.)=20
Add the amount from step 3 to the normal payment for a = single=20 period.=20
Use the Tax Tables to determine the amount to withhold = on the=20 combined payment and commission.=20
Subtract the amount determined in Step 1 from the = amount=20 determined in Step 5.=20
Multiply the result by the number of pay periods to = which the=20 commission relates.

(For more information on this method of calculation refer = to PAYG=20 withholding Calculation Sheet on Bonuses)

Option (B) - (progressive = method)

Add the commission to any other payments already received = during=20 the year to date. Determine the amount to be withheld from = the total=20 amount and subtract from that the amount that has already = been=20 withheld during the year to date, as follows:

Add the commission payment to all previous payments to = determine the total earnings for the year to date=20
Divide this amount by the number of pay periods in the = year to=20 date=20
Use the Tax Tables to work out the amount required to = be=20 withheld from the amount in Step 2=20
Multiply the amount withheld in Step 3 above by the = number of=20 pay periods in the year to date=20
Subtract the amount already withheld in the year to = date (as=20 per wages records). The result is the amount that should = be=20 withheld from the commission.

Repeat this process for subsequent commission = payments.=20 See example following:

Note that of the alternative calculations (A) or (B), = option (B)=20 provides a more accurate result, but requires more = information and a=20 more involved calculation. Either option is=20 acceptable.

Do you need more = information?

If you have any questions or need more information, = please=20 contact the ATO:

by phone on our national PAYG enquiry number=20 13 24 78. You can ring this = number from=20 anywhere in Australia for the cost of a local call=20
at our web site http://www.ato.gov.au/externalsite.asp?url=3Dhttp://www.taxr= eform.ato.gov.au.=20

For other important information, go to:=20

Example - progressive method =

(The calculation is based on the Weekly = Tax=20 Tables effective 1 July 2000 - without leave = loading)

A salesperson receives a gross weekly wage of $300, = from=20 which $37.00 is withheld. A commission payment of = $1,000 is=20 made on 24 December. The previous commission (of $900 = gross=20 with $ 215.00 withheld) was paid 10 weeks earlier (pay = 15) and=20 was the first since 1 July.

1. Add current = commission=20 to all other payments made in the year to date =
	Current commission	=3D $1000
	Previous commission paid in the = year to=20 date	=3D $ 900
	Other payments paid in the year to = date=20 ($300 x 25 weeks)	=3D $7500
	Total earnings for the period	=3D $9400
2. Divide this = amount by=20 the number of pay periods in the year to = date
	($9400 =F7 25)	=3D $ 376
3. Determine the = amount=20 required to be withheld on 2 = above=20 using the Weekly Tax Tables
	Amount withheld = on=20 averaged weekly earnings $376	=3D $ 51.00
4. Multiply the = amount=20 withheld from 3 above by the = number of=20 pay periods in the year to date
	($51.00 x 25)	=3D $1275.00
5. Subtract the = amounts=20 previously withheld in the year to = date
	Amount from 4 = above	=3D $1275.00
	Less: amount previously withheld = from=20 wages of $300
	(25 x $37.00)	=3D $925.00
	Commission (at pay 15)	=3D $215.00	$1140.00
	Therefore the amount = withheld from=20 the current commission	=3D=20 = $135.00